Professional Documents
Culture Documents
PROJECT REPORT
ON
(2009-2010)
Submitted To Submitted By
Words are indeed inadequate to convey my deep sense of gratitude to all those who
have helped me in completing this summer project to the best of my ability. Being a
part of this project has certainly been a unique and a very productive experience on
my part.
I am really thankful to Mr. Suresh Mahalingam (M.D.) for making all kinds of
arrangements to carry the project successfully and for guiding and helping me to
solve all kinds of queries regarding the project work. His systematic way of working
and incomparable guidance has inspired the pace of the project to a great extent.
Last but not least I would like to thank all the employees of The Tata AIG life
insurance,Gwalior who have directly or indirectly helped me with their moral
support for the completion of my project.
SANJAY PATHAK
Table of Contents
Contents
Executive Summary
Objectives of Project
Research Methodology Used
Introduction to insurance
Definitions
Industry segment of insurance
Market dynamics
Market overview
Factors driving changes
Reasons for opening of industry
Market structure
Role of IRDA
Company profile
History
Business summary
Business strategy
Financial market
Investment
Types of plan
Generation of insurance
Working methodology
Analysis of questionnaire
Findings
learning’s
Limitations
Bibliography
Executive summary
The main objective of this study is to “financial market of insurance and generating
leads for Tata AIG life insurance Gwalior.”
Besides this, the other objective is to understand the insurance sector in India.yhe
market share by different players in the market. Then understating types of
insurance.
After this we have analyzed our questionnaire on the basis of which lead generation
was done. And from the analysis finding are generated. Which give a generalize idea
about Indian insurance industry.
Objectives of the Project
• To understand who is the market leader in insurance sector with how much
insurance.
• To get insight about the recovery procedure followed by the bank for managing the
NPA’s.
Research Methodology
The main objective of project was to understand financial market in insurance sector
and generating leads for the Tata AIG life insurance Gwalior. The work of lead
generation was done by survey we have targeted the group who are having good
disposable income. we was not directly approaching the people to buy insurance
from Tata AIG life but indirectly creating a good image for Tata AIG.
Introduction to Insurance
Every asset has a value for its owner and also for those who are benefited with the
existence of that asset. Insurance is concerned with the protection of economic value
of assets.
Every asset has normally an expected lifetime. During this period, it is expected to
perform and provide income/comfort to the owner. The owner, being aware of this,
plans the things in such a way that by the time the expected lifetime of the asset
expires, he is ready with the funds required for its replacement. In this way, he
ensures that the value or income from the asset is not lost. Well, this appears to be a
fine arrangement provided the asset completes its expected lifetime!
All assets carry the risk of being destroyed or damaged. But all assets may not
necessarily get destroyed or damaged. Only in a few instances, the probability turns
out to be true and the asset gets actually lost or destroyed by accident or some other
unfortunate event before the completion of its expected lifetime. The owner and
those deriving benefits from the asset will suffer because the arrangement to make
available its substitute is not yet ready.
The beginning of insurance business is traced to the city of London. It started with
the marine business. Marine traders, who used to gather at Lloyd’s coffee house in
London, agreed to share losses to goods during transportation by ship. Marine
related losses included:-
In India, insurance started with life Insurance. It was in the early 19 th Century when
the Britishers on their postings in India felt the need of life insurance cover.
It started with English Companies like... ‘The European and the Albert’. The First
Indian insurance company was the Bombay Mutual Assurance Society Ltd., formed
in 1870.
In the wake of the Swadeshi Movement in India in the early 1900s, quite a good
number of Indian companies were formed in various parts of the country to transact
insurance business. To name a few:: ‘Hindustan Co-operative’ and ‘National
Insurance’ in Kolkata
United India’ in Chennai; ‘Bombay Life’, ‘New India’ and ‘Jupiter’ in Mumbai and
‘Lakshmi Insurance’ in New Delhi.
In 1956, life insurance business was nationalized and LIC of India came into being
on 1.9.1956. The government took over the business of 245 companies (including 75
provident fund societies) who were transacting life insurance business at that time.
Thereafter, LIC got the exclusive privilege to transact life insurance business in India
An overview of India’s insurance market
Insurance in India used to be tightly regulated and monopolized by state-run
insurers. Following the move towards economic reform in the early 1990s, various
plans to revamp the sector finally resulted in the passage of the Insurance
Regulatory and Development Authority (IRDA) Act of 1999.Significantly, the
insurance business was opened on two fronts. Firstly, domestic private-sector
companies were permitted to enter both life and non-life insurance business.
Secondly, foreign companies were allowed to participate, albeit with a cap on
shareholding at 26%. With the introduction of the 1999 IRDA Act, the insurance
sector joined a set of other economic sectors on the growth march. During the 2003
financial year1, life insurance premiums increased by an estimated 12.3% in real
terms to INR 650 billion (USD 14 billion) while non-life insurance premiums rose
12.2% to INR 178 billion (USD 3.8 billion). The strong growth in 2003 did not come in
isolation. Growth in insurance premiums has been averaging at 11.3% in real terms
over the last decade.
Purpose and Need for Insurance
• Possibility of damage to asset caused by any peril is the risk that asset is
exposed to.
• Risk means uncertainty or unpredictability about future loss or damage, which
may or may not happen. This refers to the losses, which may happen
suddenly and unexpectedly.
• We can say that a human life is also an income-generating asset.
• Human life may be lost due to unexpected early death or become non-
functional following sickness or disabilities cause by accidents.
If this happens by the time one is on the verge of retirement when his income
is about to cease, he might have made alternative arrangements to meet his
needs
Types of Insurance
Marine Insurance
Fire Insurance
Miscellaneous Insurance
Vehicles
Furniture
Building
Aircrafts
General
Insurance in its modern form first arrived in India through a British company called
the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance
Company in 1823, and the Madras Equitable Life Insurance Society in 1829. They
insured the lives of Europeans living in India. The first company that sold policies to
Indians with “fair value” was the Bombay Mutual Life Assurance Society starting in
1871. The first general insurance company, Triton Insurance Company Limited, was
Life insurers (18)
Public sector (1)
Life Insurance Corporation of India (LIC)
Private sector (17)
Tata AIG ,Tata AIG, Bajaj Allianz, Bharti Axa, Birla Sunlife, Future Generali,
HDFC Std, ICICI Pru, IDBI Fortis, ING Vysya, Kotak Mahindra, Max NewYork,
MetLife, Reliance Life, Sahara, SBI Life, Shriram,
Non-life insurers (14)
Public sector (6)
National Insurance Company Limited, New India Assurance Company Limited,
Oriental Insurance
Company Limited, United India Insurance Company Limited
When the life insurance business was nationalised in 1956, there were 154 Indian
life insurance
companies. In addition, there were 16 non-Indian insurance companies and 75
provident societies also issuing life insurance policies. Most of these policies were
centred in the metropolitan areas like Bombay, Calcutta, Delhi and Madras. The life
insurance business was nationalised in 1956 with the Life Insurance Corporation of
India (LIC) designated the sole provider – its monopolistic status was revoked in
1999.
Factors Driving Change
The insurance industry has been growing between 15 and 20 percent, but it lags for
behind its global counterparts.
This was due to the following reasons. .
1. Insurance companies create products and go out to find customers.They do not
create products that the market wants.
2. Insurance awareness among the general public is low.
3. Term- Insurance Plants are not promoted.
4. Unit -linked assurances are not available.
5. Insurance covers are expensive. Inefficient management and low investment yield
are responsible for the high premium charged by Indian Insurance companies
Investment restrictions have been responsible for 10w yields.
6. Returns from Insurance Products are low.
7. There is a dearth of innovative and buyer-friendly insurance products.
8. Most agents and development officers are interested only in producing new
business servicing existing customers satisfactorily has not been a priority for them
the obvious reason to this is that incentives are them the obvious reason to this is
that incentives are based on new business generation and not on satisfactory
serving of existing customers it is surprise to note that more than 10% of LIC policies
are surrendered or get lapsed every year.
9. There is no market research worth the name and computerization is woefully
inadequate.
Market Structure:
What is the appropriate market structure for insurance markets?Should it be
monopoly (state or regulated) or should there be unlimited private entry or should
there only be a few regulated players? The answer is quite obvious. When traditional
public sector businesses like banking,power, telecom, airlines and even postal
services have been allowed
private entry, why must insurance remain a state monopoly? State monopoly had
little incentives to offer a wide range of products with more complex and extensive
risk categorization, better technology and better customer service including faster
settlements. Keeping in view the recommendations of insurance reforms committee
that a
limited number of high capital private companies be licensed, and no firm be allowed
to operate both in life and non-life insurance, IRDA has granted licenses to three
private companies on October 24, 2000 - Reliance Fire and General Insurance,
HDFC Standard Life Insurance and Royal Sundaram Alliance Insurance, to set up
the shop and
to get into business.
Role of IRDA
IRDA’s primary function is to protect consumer interests. This means ensuring
proper disclosure, keeping prices affordable but also insisting on some mandatory
products, and most importantly making sure that consumers get paid by
insurers.Further, ensuring the solvency of insurers is a very important function of
regulatory authority.IRDA has evolved a set of operational guidelines to deal with
maintaining the solvency of insurers.Growth of insurance
business entails better education and production to customers, creating better
incentives for agents and intermediaries. It has evolved guidelines on the entry and
functions of such intermediaries. Licensing of agents and brokers are required to
check their indulgence in activities such as twisting, fraudulent practices, rebating
and
misappropriation of funds.
Insurance Sector - Emerging Areas:
Some of the emerging areas for insurance sector in India are:
1. Demand for Pension Plans:
Two relatively modern trends affect life insurance business in India significantly. The
first one is the joint family system which worked like an insurance arrangement. With
more and more nuclear families becoming the rule, there it a greater demand for life
insurance cover the second trend is that elderly are increasingly having to fend for
themselves. In 1990, India had about 54 million people above the age of 60. This
number is expected to increase to 100 million by 2004, and to almost 10% of the
total population by 2010. Thus future senior citizens look towards planning for their
own old age and the need for pensions and annuities. These two trends portend a
large and growing market for life insurance in India.
History -
AIG insurance group in America with a history dating back to 83 years as
one of the leading provider of life and pension products to Europe and other
parts of the world. The history of AIG Life Insurance I starts at 1919 during
nationalization when AIG was the largest foreign insurance group in terms of
the compensation paid by the Indian Government. In 2001 AIG was the first
foreign insurance company to start its representative office in India. At present
in AIG Insurance India, the AIG group is a 26% share holder and the TATA
group holds 74% shares in the joint venture.
AIG is distinguished for being the first foreign insurance company to set up its
representative office in India, in 2001. AIG Life Insurance Company established the
concept of Bancassurance in India, and has leveraged its global expertise in
Bancassurance successfully here. The company boasts of 483 branches in India,
supporting its vast distribution network. TATA AIG offers various products that are
meant to provide customers flexibility, transparency and value for money. Given here
is a complete list of products & services offered by Tata AIG Life Insurance
Company India Ltd.
Business summary
What we do
Tata AIG have premium income and investment sales of £51.4 billion≠ and £381
billion†† of funds under management. We have 54,000 employees serving over 50
million customers in 28 countries around the world.
Tata AIG purpose is to bring prosperity and peace of mind. We will do this by
realising our vision: "One Tata AIG, twice the value".
By working together across our businesses, Tata AIG will optimise performance in
the global marketplace and maximize the value we can generate for all our
stakeholders
Strategy
Tata AIG purpose is to bring prosperity and peace of mind to our customers. We will
do this by realising our vision: One Tata AIG, twice the value. By working together
across our businesses, we will optimise our performance in the global marketplace
and maximise the value we can generate for all our stakeholders.
The Companies Act requires that a fair review of the business contains financial and,
where applicable, non-financial key performance indicators (KPIs). We consider that
our financial KPIs are those that communicate to the members the financial
performance and strength of the group as a whole. These KPIs comprise:
To demonstrate our commitment to our vision of “one Aviva, twice the value”, we
announced our ambition in February 2008 to double IFRS earnings per share by
2012. This ambition is based on total IFRS return, including investment volatility and
non-operating items over the weighted average number of shares.
Our IFRS earnings per share for 2008 was a loss of 36.8 pence (2007 restated: 48.9
profit). This reflects the net adverse short-term fluctuations and economic
assumption changes due to adverse market movement, continued investment in
developing the business and strengthening our provisions for latent claims.
Group operating profit before tax**
In 2008 we delivered strong MCEV operating profit at £3,358 million, up 10% against
2007 and IFRS operating profit of £2,297 million, up 4% against the prior year.
These results reflect higher life and general insurance results offset by lower fund
management returns.
Our intention is to increase the total dividend on a basis judged prudent using a
dividend cover in the 1.5 to 2.0 times range as a guide, while retaining capital to
support future business growth.
Our board has recommended a final dividend of 19.91 pence per share (2007: 21.10
pence) bringing the total dividend for the year to 33.00 pence. The total dividend has
been maintained in line with 2007. Dividend cover is 1.9 times (2007: 1.6 times)
within our target range.
Financial analysis
2008 2007 ˜
£m £m
Worldwide long-term savings new 40,278 39,705
business sales* ^
Worldwide general insurance and 11,137 11,137
health business net written
premiums**
Total sales 51,415 50,274
On an MCEV basis for 2008 and 2007. Prior years presented on an EEV basis.
~ 2007 comparatives have been restated for change in approach to reserving for
latent claims.
* Present value of new business premiums plus investment sales.
**From continuing operations.
a. Basic earning per ordinary share are shown. No figures have been provided for
diluted earnings per share.
6. Financial market
Fianancial market”, takes into cognizance the growing, observable fact that today s
customers distinguish themselves as having unique desires and interests and they
demand that businesses understand and meet those personal needs. To satisfy
these customers, major marketers must swing from casting a wide marketing net
over a vast crowd to selling to millions of individual customers. This shift from mass
to micro marketing presents both opportunities and challenges to market
researchers. In their efforts to market on a one-to-one basis, market-driven
companies must quickly make the move from creative, right-brain strategies to
analytical, left-brain strategies. One such right brain strategy is product placement.
Thanks to a growing use of personal video recorders and larger placement deals,
marketers move from traditional advertising to alternative media. Due to TV reality
shows etc, the explosion of reality TV programs has played a big role in product
placement growth in TV, according to PQ Media. The success of such shows as
Survivor and The Apprentice proves the value of product placement as an additional
component to the declining popularity of the 30-second spot, the report states. If
done correctly, product placement gets consumers thinking about trying new
products. Like the product placement strategy for making consumers sit up and
notice your product, this book on Micro marketing – Concepts and Cases, attempts
to explore other right brain strategies as well. The key to effective advertising and
promotions is a seamless communication/message. There should not be a
discordant note anywhere. This is difficult to achieve and is a challenge to
Organizations worldwide. It is about synchronizing the business context, the
customer context, the internal context, and the external context pertinent to a
particular Company/Organization.
F o r I n t e r n a l C irc u la t io n O n ly
C H R Y S A L IS T a t a A I G L i fe C o r p o r a te T ra i n in
For Internal Circulation Only
Program Objectives
Session Objectives
W hat is I nvestment?
Ea rn M o n e y
Spend S a ve
K e e p a sid e In v e s t
Yo u c o u in
ld v e sto
t e a rrn
n in c o mo r/a
e n dc a p ita l g ainin th e fu tu
C H R Y S A L IS T a t a A IG L ife C or p or a te T ra in in g a n d D
F or I nter nal C irc u latio n O n ly
E a r n in g s R s . 2 0 la k h s
E xp en s es R s . 7 la k h s
S a v in g s R s . 1 3 la k h s
In ve s t i n a H o uKs e e p A s i d e
R s . 1 0 la k h s R s . 3 la k h s
c o n t i n u ed . ..
C H R Y S A L IS T a t a A IG L ife C or p or a te T ra in in g a n d De
For Inter nal Circulation Only
What is Investment?
Year Year
1 5
Why Invest?
One needs to invest to:
1.Beat Inflation
B eat I n f latio n
T h e r a te a t w h i c h c o s t s o f g o o d
Today 1 Y e a r L a te r
5 % In f la t io n
c o n tin u
C H R Y S A L IS T a t a A I G L i fe C o r p o r a te T ra i n in
For Inter nal Circulation Only
Beat Inflation
Financial Goals
Buying a car Further education
Retirement
Buying a house
Marriage
We may be affected by
unfortunate events such as
critical illness, accidents etc.
Investment Decision
Having determined the need for investment one needs to consi der
the appropriate investment avenues (Where to invest?)
Investor Profile
Gambling
Commodities
Shares
Traditional Insurance
Company FD
Company Bonds
Government
Bonds
Return
Session Summary
Session Objectives
Securities
Securities
Units of a
Mutual Fund Derivatives
Shares
Bonds
Securities Markets is a place where one can buy and sell securities
REGULATORS
Department of Economic Department of Company
Affairs (DEA) Affairs (DCA)
Securities and
Reserve Bank of Exchange Board
India (RBI) of India (SEBI)
Securities Market
Primary Secondary
Market Market
Sale of new
new Transaction in
securities existing securities
Debt Instruments
INVESTOR
ISSUER
DEBT INSTRUMENT
MONEY
Predetermined Term s:
1. Rate of Interest (Also known as Coupon Rate)
2. Periodicity Of Interest Payment (Annually, Semi-annually, etc.)
3. Repayment of Principal Amount on a specific Date (Maturity Date)
Equity / Share
Company Capital
Debt Equity
The holders of such shares are members of the company and have
voting rights whic h gives them company related decision making powers.
Example:
Company ABC Ltd issued 5000 shares of Rs 10 each.
So the total Equity Capital of ABC Ltd. is 5000 shares x Rs 10 = Rs. 50,000
Derivatives
Derivative
Equity
Foreign Exchange
(forex)
Underlying
Commodity
Bonds Asset
Derivative is a type of
of security whose value is derived from the value of
the underl ying asset
Types of Derivatives
Mutual Fund
Investors (Individual s / Corporate investors)
Return
Return on Investment Appreciation in
(ROI) value of units
Mutual Fund
Equity Funds/
Investment
Gilt Funds
Growth Funds Objective of
Mutual Fund
Tax Saving
Funds Liquid Funds/ Money
Market Funds
Balanced
Funds Debt/Income
Funds
Session Summary
• Raksha
• Super star
• Health protector
• Health investor
Generation of insurance
1. Bank tie up – TATA AIG life insurance is having a tie up with some of the
banks which help them to get insurance. TATA AIG life insurance provides
them insurance.eg. Punjab and Sindh bank.
2. DSF(Agent) - agents are the people who work for the company and bring
insurance for the company. Major part of insurance is generated by these
people only. India largest insurance company LIC is pioneer of this model
they are the people who are running this model successfully and they are
market leader in insurance.
3. Direct (call center) – This new marketing phenomena applied by most of the
insurance company in these days. Insurance companybring the list of bsnl
telephone number and they randomly call people and try to convince people
to purchase insurance. Some of people get ready to purchase insurance and
this way company sell their insurance
2Financial loss
Emotional loss
Financial loss
The person who has been passed in some accident or disease might have some
earning and he or she was going to earn till his or her survival so this thing cause
financial loss to the family to cover these kind of loss insurance companies are there.
for covering this financial loss insurance companies are helping the family.
Plans
1. Term plans
2. Endorsement plans
Term plans
Life insurance can be defined as a means to protect the policy holder's family in the
event of his demise. And indeed it is an essential component for the future family
planning.
Term Life insurance policy is probably the basic form of all Life Insurances. It
provides the insurance coverage for a specific term of years with a specified
premium. Over here the premium buys only the death protection and nothing else.
The term life insurance types would mostly occur in combination of the above three
parameters:
1. The face amount can remain constant or decline.
2. The term can be for one or more years.
3. The premium can remain level or increase.
Term life insurance benefits offer an affordable protection and sometimes it also
comes with a guaranteed premium. If the insured dies while the policy is in force, the
face amount is paid to the named beneficiary. The insured can renew the coverage
at a higher premium at the end of the premium guarantee period.
The reason why the Term Life is an ideal choice for individuals is that, it has an initial
lower premium rate compared to the permanent policies. And the premium can be
increased at each renewal.
We can define the two common types of term life policies namely -
1. Yearly Renewable Term: For this type of a policy the insurance company assures
to provide a policy worth an amount equivalent or lesser to the insurability of the
insured and also a premium fixed according to the insured's current age.
2. Mortgage insurance: The flat premium rate of this type of a policy reduces its face
value. Incase the policy holder passes away the mortgage will be paid, since the aim
of the policy is to match the face amount with the amount of mortgage on his
residence.
Endorsement plans
Working methodology
The work which was assigned to me was to bring the leads from government offices
of Gwalior. Sometimes company was providing me the contacts and most of the time
I have to approach the government offices by myself.
Leads – A person who is interested in buying any policy that is called a lead. After
the lead generation company sends their relationship manager to the person and the
R.O. find the requirement of that particular person and provide him insurance as per
his requirement.
Targeting- I have to target a group of people who are having a good disposable
income means I have to target officers. in layman’s term I have to target the people
who are having a salary of more than 20000.
Approach- during my training I have been taught that how I have to approach
people. First of all I have to go to any government office and tell them that I am
doing my project on insurance sector and I am comparing the insurance policies of
government employees and private sector employees. in this way I have to find out
who is the people willing to buy any insurance and how much they are ready to
invest and have to submit this to company. On the basis of this company finalize the
leads and TATA AIG’s relationship officer contacts them. This Is the way I was
approaching the people. This was our questionnaire on which basis we have to
generate the leads. It was possible for me to reach 50 people in the span of 15 days.
Name
Address
Phone no
Yes No
Yes No
Q3 if you are married have you planned for your child’s education /marriage?
Yes No
Yes No
Q5 If we will suggest you a good plan for your child/retirement/short term investment
will you be interested?
Q6 if yes, how much you will you be comfortably save for your child/retirement/short
term investment Per year?
Analysis of questionnaire
Yes no
Ans
Q2 which companies insurance do you have?
This pie chart is based on market data of insurance in the year 2007-08. Thepie
chart given below is on the basis of our survey.
Q3 if you are married have you planned for your child’s education /marriage?
Ans. Out of 200 people only 10 people was having a retirement plan and all the
people was having the same reason for not having retirement plan was that they was
government employees ,after their retirement they will be getting pension. They
believe that their future is secure this was the reason why they people was not
having retirement plans.
Q5 If we will suggest you a good plan for your child/retirement/short term investment
will you be interested?
Q6 if yes, how much you will you be comfortably save for your child/retirement/short
term investment Per year?
Ans. Not specified by people, they were saying this thing is dependent on the plan.
Findings
Learning’s
2. Dealing with people- The most important thing which I have learn with
TATA AIG is that how to deal with people because my work was like that I
have to contact government employees and find the opportunity that they
are going to buy any policy or not.
Limitations
I. Company was having interest in getting leads.
II. Covering all the government offices was very difficult because before
entering in some of the office you have to take permission from higher
authority.
14. Bibliography
www.tata-aig.com
www.wikipedia.com
www.irdaindia.org
www.google.com